Trump Eases Powell Tensions Amidst Trade Optimism

President Trump stepped back from threats to dismiss Federal Reserve Chair Jerome Powell, easing tensions with Wall Street. Trump's critique of Powell's rate policies persists, as optimism rises around a potential trade deal with China to lower tariffs. Despite Trump's comments, economic risks remain high.

President Donald Trump has retreated from his previous threats to fire Federal Reserve Chair Jerome Powell, a move that was met with positive reactions from Wall Street. Trump's criticism of Powell's handling of interest rates persists, indicating an ongoing concern over the current financial policy direction. "I have no intention of firing him," Trump assured reporters, though he added he would prefer Powell to be more active in reducing interest rates.

Alongside his critiques, Trump expressed optimism regarding a potential trade agreement with China that could reduce tariffs, offering renewed hope to investors. Trump suggested that any deal could result in significantly reduced tariffs on Chinese imports but clarified that rates will not drop to zero. The markets, previously shaken by Trump's tariff policies and his verbal attacks on Powell, responded favorably to the shift in tone.

The president's previous negative remarks about Powell—including social media posts describing Powell as "a major loser"—had unsettled the markets due to concerns over the Fed's independence. Trump's latest comments, however, indicate a temporary reprieve from such threats, though the underlying tension concerning the Fed's rate policies remains. In the meantime, economic forecasts project heightened risks, with trade tariffs and upcoming legal proceedings potentially impacting financial stability.

(With inputs from agencies.)